When Injured Patient Arrives at ER, Hospital Managers Must Prepare for Interpleader Lawsuit, Seek to Recover Unpaid Medical Bills.
From the moment a patient injured in an accident arrives at the emergency room, hospital administrators, emergency staff, and admitting department personnel and patient accounting representatives must be on the alert for another crisis – expect the patient to sue under an interpleader action to avoid paying outstanding medical bills, and prepare a strong defense.
My law firm has represented a number of healthcare provider clients in interpleader cases, and the financial stakes are high. Hospitals leveraging experienced legal representation from the start of the process dramatically increase their odds of full recoveries; inattentive hospitals that fail to appear at mandatory hearings are hardly ever paid.
Interpleader cases typically stem from personal-injury lawsuits in which personal-injury attorneys represent injured patients and successfully collect a recovery on behalf of their client that is insufficient to pay all healthcare providers. These attorneys typically charge one-third or more of the total settlement award, or judgment, that collection being a function of the medical bills.
The injured patient must first seek medical treatment and incur medical expenditures in order to demonstrate “pain and suffering.” The pain-and-suffering award equals up to three-times the “specials.” Thus, the medical bills are required for the total recovery.
But the settlement check, or award, covers more than just pain and suffering – it also reimburses for the medical bills. The recovery necessarily includes medical expenses still owed by the patient to providers. Frequently, it also includes expenses owed to the health plans that paid the providers, if they have a lien or subrogated rights to the personal-injury claim.
This situation can create a legal conundrum: For example, a patient treated in a hospital due to a car accident hires a lawyer. The lawyer then obtains a settlement, but the client still has bills to pay and owes the hospital and ER doctors. The providers request payment, but the client refuses to pay them, or is unable to do so due to a recovery insufficient to pay both the hospital and ER doctors.
Under the Model Rules of Professional Conduct, a version of which is found in many states, lawyers are ethically required to avoid such conflicts of interest since loyalty to the client is essential. But attorneys may have a duty to a third party, as well, in this case, the hospital creditor. Due to the rule concerning the safekeeping of disputed property, the attorney has a conflict of interest and must refrain from acting as an arbiter in the client-provider dispute, necessitating an interpleader action.
Hospitals often don’t defend these actions. But if five providers are sued in an interpleader case, and only one defends, then the judge probably would divide payment between the sole defending provider and the plaintiff, excluding all other providers that failed to defend.
Bottom line for hospitals facing interpleader actions: No legal defense equals zero payment. So retain legal counsel and begin preparing for an interpleader action as soon as the injured patient arrives at the ER for treatment.
Anderson & Quinn, LLC is a renowned law firm based in Rockville, Maryland, providing individuals, businesses, corporations, and healthcare institutions with the legal and litigation support they need.
